Black Hawk completes Triton merger

The merger deal between Triton Mining (TTM-T) and Black Hawk Mining (BHK-T) has closed.

The two companies had agreed earlier this year to amalgamate, share-for-share, with Triton becoming Black Hawk’s wholly owned subsidiary.

Shareholders of Triton recently approved the deal at that company’s meeting.

Together the companies have minable reserves of just over 700,000 oz. gold, plus about 3 million oz. in resources. Triton produced 48,594 oz. gold in 1997, and Black Hawk, 67,067 oz.

Triton, which had been experiencing problems at its Limon gold mine in Nicaragua, wrote down the value of the project owing to the fall in the price of gold. The writedown contributed US$15.5 million to a loss of US$23 million on revenue of US$15 million in 1997.

Limon’s production costs, which were US$344 per oz. in 1996, fell to US$280 in 1997, but further improvements will require at least US$17.3 million in capital investment over the next two years.

Black Hawk posted a 1997 loss of $4.3 million but, at the same time, an operating profit of $6.5 million on revenues of $33 million. The loss stemmed from a writedown of $10.8 million on exploration properties. The company owns the small, but low-cost, Keystone gold project at Lynn Lake, Man., and has substantial resources blocked out at its Vogel property east of Timmins, Ont.

The merger has resulted in the cancellation of two loans, each of US$1.5 million, that Black Hawk had made to Triton. The loans, one due in October and the other in April of next year, were charged at U.S. prime plus 2%.

Under the terms of the loan, Black Hawk also received 3 million warrants to purchase Triton shares at 40 cents.

As part of the amalgamation, Colin Benner, president of Black Hawk, hands over the reins to Thomas Ogryzlo of Triton. Benner remains a director of the amalgamated company.